Endgame for German industry

Good morning dear readers,

some readers have asked me, like my esteemed predecessor, to include occasional quotations from great poets and thinkers in the morning briefing. A reader even sent me a long list of recommended quotes – thank you very much. And here comes a classic: “But where there is danger, the saving power also grows.”

What Friedrich Hölderlin could not have guessed in his industrial-political innocence: Sometimes there is too much of a rescuer in danger. At least as far as the reaction to the energy price shock after the Russian attack on Ukraine is concerned. The federal government has to strike a fine balance:

  • If the industry leaves them alone with the rising prices, a large number of companies are threatened with extinction. These include those who, with a little bridging help, could certainly switch their production to processes that use less fossil energy.
  • If the federal government permanently subsidizes the rising energy prices for companies, then it paralyzes the innovative power in the companies and preserves an economic structure that was no longer up to date even before the start of the Ukraine war, but was kept alive solely by the inflow of cheap Russian pipeline gas .
  • Between these two abysses lies the fine line on which German industry can find a way into the future. Say goodbye to some energy-intensive industries, they are more at home where there is an abundance of green energy. However, industry can remain Germany’s prosperity machine if it focuses even more on its strengths: the focus on innovation, on products and processes where the added value comes from knowledge and not from cheap gas.

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A Handelsblatt team headed by economic policy reporter Julian Olk uses these three scenarios to analyze the “German industry endgame” in our Friday title.

The prosperity of Germany depends to a large extent on industry. But this is deep in crisis.

Or are we in Germany perhaps all making too much fuss about the future of our factories? Adam Tooze defends this thesis when he proclaims: “Germany has an industrial fetish.” The economic historian from New York’s Columbia University demands: “Of course we need solutions from industry for the energy transition, but building a whole picture of society on this is exaggerated .”

In response to the reply that industry is Germany’s guarantor of prosperity, Tooze really gets going: “Yes, but only because many people ensure that nothing can change in this structure. In Germany there is an ideological exaggeration of this sector that ignores the realities. There are other sectors where the German economy could make better use of its resources: services, research, the search for new technologies. You can’t tell me that assembling cars and cooking steel fits with the German self-image of being at the forefront of global economic achievements.” .

The new VW boss Oliver Blume reorganized a lot in his first months in office – and showed himself to be decisive.

Oliver Blume should lead Germany’s industrial icon par excellence into the future. At the beginning of September, the 54-year-old took over the management at Volkswagen. The future viability of the group with its 660,000 employees will be the topic today, Friday, when the shareholders come together for an extraordinary general meeting. The fund company Deka, at least, is not very enthusiastic about the company’s recent development. Deka representative Ingo Speich sees VW “flying blind into the electric world”.

He criticizes a planned special dividend, with which the shareholders should participate in the proceeds from the IPO of the sports car subsidiary Porsche. Volkswagen is throwing money overboard unnecessarily – for Speich at the wrong time, because “the final strategy of the new CEO Oliver Blume is still in the stars”. High time for our car team to subject the new VW boss to a 100-day inspection.

There is more and more movement in the transatlantic subsidy dispute. The White House has now presented guidelines for the implementation of the Inflation Reduction Act (IRA) for the first time. The USA wants to use this to promote the purchase of e-cars in the future – but only if they were mainly manufactured in the USA. Europeans fear that their companies will be disadvantaged as a result.

A breakthrough is now on the horizon. On page 45 of the guidelines it says that the tax credits should also apply to electric cars whose battery components come “from trustworthy trading partners”. This could include batteries or battery parts from the European Union. However, three pages later, the battery rules are tightened again: “The vehicle must contain a certain percentage of critical minerals that were extracted or processed in the United States. Or in a country with which the United States has a free trade agreement.” That excludes European vehicles.

This Friday and Saturday, EU member states and EU parliamentarians are discussing a reform of European emissions trading. Even in bureaucracy-ridden Brussels, the matter is considered tricky. There are still negotiating positions on the table that can actually only have arisen in the Tipp-Ex frenzy – for example that different fuel prices will apply at petrol stations for business and private trips in the future because some are included in emissions trading, but others are not.


But turning away in frustration is not an alternative: a functioning emissions trading system is THE central element for climate protection that does not degenerate into state patronage. In this case, the climate protection lobby has the most pragmatic position: it demands that all exceptions be removed from the negotiations at the weekend, which means that every liter of petrol and every kilowatt hour of gas would be subject to the same CO2 price. And until this position prevails, we console ourselves with Max Weber: “Politics means a strong, slow drilling of hard boards”. Ha, did you notice? Another classic quote.

I’m off to a few days of Christmas vacation, which I’ll primarily devote to heavy, slow consumption of soft marzipan potatoes. My colleague Teresa Stiens, who many of you have already met, will take over from Monday. I’ll get back to you on December 27th.

I wish you a peaceful Christmas. Thank you for your morning loyalty!

Best regards


Christian Rickens

Editor-in-Chief Handelsblatt

Morning Briefing: Alexa

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